Building a Real Estate Rental Portfolio Can Lead to Long Term Profits

Posted by admin on Feb 22, 2011 in Bay Area Equity Group Blog | 0 comments

In recent years the foreclosure market has presented an unbelievable opportunity for investors. Homes can be purchased for pennies on the dollar. Once renovated these same homes can be tenanted and generate monthly revenue for an investor.

For example, an income producing property in Detroit that is a standard brick-built, 3 bedroom, with 1 bathroom, and has a 1 car garage in West Detroit can typically be rented anywhere between 700 USD to 1,000 USD. Initial investment for a property such as this can range from 30,000 USD to 45,000 USD. After expenses of property maintenance, property taxes, and building insurance a potential investor can net anywhere from 5,000 USD to 7,000 USD per year.

With high yielding returns and long-term capital growth, building a real estate rental portfolio can be extremely profitable. An investor can recoup his initial investment within the first 5 to 10 years depending on the investment. However, it is important to understand that with any investment there is a risk. The market is constantly changing due to inflation and values.

The most convenient investment opportunity for investors is to work with property liaisons in the area of interest. Ensure that the liaison selected has great knowledge of the city, schools, and the community. This way, they will locate only the properties that are best suited for the type of tenant that will rent long-term.

Being a DIY (Do It Yourself) investor can be difficult. If you are sourcing properties in different states or different countries, choosing a decent property may be difficult unless you have previous knowledge of the city or state you wish to purchase in. Although the costs of foreclosed properties may be attractive, consider the fact you will have to; research and assemble a team to assess and successfully complete renovations; market the property for tenants; and coordinate a system in which you can collect rent.

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